Greek IMF Talks Began Today and G-20 Meeting Starts Tomorrow

April 21, 2010

The dollar has slid 0.3% against sterling and the Canadian dollar.  The greenback is off 0.1% versus the kiwi, flat relative to the yen and Swissy, but up by 0.2% against the euro and 0.1% against the Australian dollar.  Talks began today in Athens with the EU and IMF to activate emergency aid for Greece.  The Canadian dollar hit a new high for the move of 0.9926/USD in the wake of yesterday’s more hawkish Bank of Canada policy announcement.  The Swissy is hovering near the apparent new Swiss National Bank target of 1.4330 per euro.

The Nikkei recovered 1.7%, climbing back above 11K.  Equities gained 2.0% in China, 1.7% in South Korea, 0.8% in Indonesia, and 0.6% in Australia, but they fell 0.5% in Hong Kong, 1.0% in Thailand and 0.5% in Singapore.  The German Dax is trading unchanged, but the British Ftse and Paris Cac are off 0.6% and 0.3% in Europe.

Sovereign ten-year bond yields are steady in Japan, Germany and Britain, but the Greek 10-year yield rose above 8.0%.

Oil firmed 0.5% to $84.29 per barrel, and gold prices went up 0.5% to $1144.60 per troy ounce.

In advance of a G-20 meeting that starts tomorrow in Washington, Brazil and Indian officials endorsed the view that the yuan should appreciate.

Japan’s February index of leading economic indicators was revised up 0.6 to 98.5, best since June 2007.  Such stood at 97.3 in January and bottomed in February 2009 at 74.8.  The coincident index was revised downward by 0.2 to a 19-month high of 100.5, which compared with 100.3 in January and a low of 84.7 in March 2009.  The lagging economic index was 85.0 in February versus a low of 81.7 in July 2009.

The Bank of Japan’s April quarterly loan officers survey revealed somewhat better loan demand than in January.  Nishimura of the BOJ gave a speech in which he identified some evidence that deflation is starting to abate but promised a policy that will promote low short- and long-term interest rates until the job is done.

Australia’s index of leading economic indicators rose 0.5% in February, 2.5 times more than in January and the ninth increase in a row.

The Bank of Thailand left its key interest rate at a record low of 1.25%.  An increase had seemed likely until political unrest erupted earlier this month.  Contingent upon what happens politically and the fallout of such on confidence, a rate increase at the next meeting on June 2 could occur.

Bank of England minutes of the April 7-8 policy meeting show another unanimous vote for keeping the Bank Rate pinned at 0.5% but not raising the Gbp 200 billion exhausted ceiling on asset purchases.  The nine members of the Monetary Policy Committee conceded that some inflation risks have appeared but felt the underlying economic fundamentals still point to lower inflation in the more distant future.

Bank of England Agents scores indicated somewhat softer personal consumption since the start of this year, subdued business investment intentions, but gradually recovering exports and factory production.

British labor statistics were released.  The claimant count of unemployment fell much more than forecast for a second straight month, dropping 32.9K in March after falling 40.1K in February.  The count was still 90.1K greater than a year earlier.  The two measures of the jobless rate gave mixed signals, easing a tenth to 4.8% on a claimant basis but rising two-tenths to 8.0% on an ILO basis.  Average wage earnings jumped to 2.3% on year in December-February because of higher bonuses.  Excluding such, earnings firmed just two-tenths to a still benign 1.7%. 

In a further move to contain property market frothiness, large Chinese banks will need to submit to quarterly stress tests.

Dutch consumer confidence slid to minus 15 in April from minus 12 in March.  Iceland reported higher unemployment of 7.6% in 1Q10 after 6.7% in 4Q09 but steady on-year wage growth of 3.6% in March.  Swiss M3 expanded 5.9% between March 2009 and March 2010.

Canada releases wholesale turnover data today.  U.S. oil inventories get reported.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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